I open by congratulating officials from Georgia and Gwinnett County, Georgia, that last week announced that the NCR Corporation will move its corporate headquarters to Georgia. That is a big win for the state at a time when a big economic win is needed. Further, I am sure the people of NCR will love metro-Atlanta.
Winning NCR will cost the state more than $96 million, the Atlanta Journal and Constitution reported yesterday. The Journal report goes on to quote economic development officials that say the deal was well worth it for the state despite the cost. I doubt there is a good argument against that statement. The cost is expected to have a pay back period of five years. We could use a few more deals just like this one. So could every state in the nation.
And that is where I begin to have a concern. State governments have always fought to draw business to their state, whether through tax breaks, road works, ports, or airports. Businesses bring jobs and jobs bring tax revenues and make the voters happy. Sounds like a no-brainer because everybody wins. Except that not everybody does.
When state and local governments grant tax breaks to individual companies those tax breaks leave competitors at a disadvantage. NCR will receive $96 million in tax breaks to move its headquarters to Georgia. That’s a lot of money. Georgia law allows for tax breaks of this volume to companies that will bring more than 1,800 jobs to the state. So if you’re company is already here, or if your company is too small to bring 1,800 jobs here, you don’t get that tax break. That means that when you and your company pay state taxes those taxes go to help a company compete with you. This is exactly the scenario facing Ford, Honda, Toyota, and all the other automobile companies with business interests in the U.S. These companies and their employees are paying taxes to help GM and Chrysler compete with them.
I understand that all 50 states plus just about every nation on earth would happily give tax breaks to get NCR and companies like NCR. That, according to one line of thinking means each state has to compete through targeted tax breaks to win the business for their state.
However, if states were to cut taxes across the board the state would be more competitive to large and small businesses. Further, the reduced taxes will help businesses already in the state to flourish.
I have no doubt that across the board cuts will hurt state revenues in the short-term. Too bad. Just about every household in the nation has cut back spending. Why is that government officials think that government needs take priority over citizens needs? How can government officials justify raising taxes or keeping them elevated when so many households are struggling?
Again, I congratulate Georgia and Gwinnett county officials and I extend a welcome to the NCR employees that will be moving here. Georgia is great.
My point is that state and federal officials, and most important, voters, should recognize the benefits of reducing taxes. Low taxes across the board is a real business incentive.
